Facebook earns FTC approval for Instagram acquisition, value drops $253M
More than four months after Facebook announced an agreement to acquire photo-sharing application Instagram, the deal has finally earned Federal Trade Commission approval.
The FTC voted 5-0 to close its nonpublic investigation into the Facebook/Instagram deal after determining the proposed acquisition does not violate antitrust rules. The FTC greenlight paves the way for Facebook to begin integrating Instagram into its mobile social networking services--asked by TechCrunch when it expects the deal will formally close, Facebook deflected the question, stating only "We are pleased that the Federal Trade Commission has cleared the transaction after its careful and thorough review."
Facebook initially agreed to pay $1 billion for Instagram, an offer comprised of $300 million in cash and close to 23 million shares of Facebook stock, valued at $30 per share when the acquisition was first announced in April 2012. Facebook went public a month later, but its stock price has taken a beating over concerns the company has failed to install a viable long-term monetization model. Facebook stock closed Wednesday at $19.44 per share, meaning the Instagram acquisition is now valued at $747 million--$253 million less than the original price.
The free Instagram app, first introduced in October 2010 for Apple's (NASDAQ:AAPL) iOS platform, enables users to snap, filter and manipulate photos, upload their work to Facebook, Twitter, Tumblr and foursquare, and post likes and comments. Instagram now touts 80 million active users across iOS and Google's (NASDAQ:GOOG) Android, and regularly records more than 100,000 new installs every day.
Facebook will turn to Instagram to help improve its mobile user experience. "Facebook is the most used app on basically every mobile platform. So when we think about what we want to do right now, we want to increase the depth of experience in addition to just growing users," co-founder and CEO Mark Zuckerberg said last month after Facebook reported second quarter net losses of $157 million. Facebook's mobile monthly active users top 543 million, up 67 percent over year-ago totals--58.86 percent of all Facebook users now access the platform via mobile device.
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